Can Wal-Mart Conquer the Amazon?

Despite recent headwinds in Brazil, Wal-Mart is fighting hard to win in the country of over 200 million as it looks for growth in its business overseas. At The Wall Street Journal Samantha Pearson and Sarah Nassauer write:

Wal-Mart has said it plans to spend 1 billion reais, or some $320 million, over three years on upgrades to its hypermarkets in Brazil, mostly sticking with a strategy it has followed here for two decades. Wal-Mart’s net sales in the country have been sluggish in recent years compared with its other international markets, falling 4.1% for the three months ended Jan. 31, versus increases for the same period of 8.9% across Mexico and Central America, and 5.4% in China.

“Ever since it entered Brazil, Wal-Mart has found it difficult to integrate itself into the market,” says Flávio Tayra, a professor of the Federal University of São Paulo, who specializes in food retailing. “It occupies a modest space here given all the potential it has.”

As in the U.S., Wal-Mart’s main big-box stores in Brazil sell everything from bananas to car tires. They were popular with Brazilians during the hyperinflation of the 1980s and early 1990s, when prices were rising at stratospheric rates. Many shoppers would get paid, then rush to the hypermarket on the outskirts of town to stock up before prices rose further.

Now, that mode of shopping has lost its appeal for many here. Hellish traffic in mushrooming citiesmakes hypermarkets hard to reach. Small neighborhood convenience storesare attracting Brazilians who increasingly live alone, not in large family homes.